The National Pension Service (NPS) appears not to vote on Doosan Robotics Inc.’s merger with Doosan Bobcat Inc. from Doosan Enerbility Co., with major proxy advisors divided over the controversial deal.
Under the deal, Bobcat will be spin off from Enerbility, its largest shareholder with a 46% stake and then will be taken over by Robotics.
The merger provoked strong criticism from shareholders, arguing their merger between loss-making Robotics and the group’s cash cow Bobcat failed properly to reflect the latter’s enterprise value and would hurt minority shareholders’ interest.
On Monday, the NPS Investment Management’s decision-making committee for responsible investing decided to back the spin-off and takeover if the base prices of Enerbility and Robotics, set for the transaction, are higher than its buyback price of 20,890 won as of Jan. 10.
Otherwise, it will abstain from voting at an extraordinary shareholder meeting of Enerbility scheduled for Jan. 12. Shares in Enerbility gained 3.87% to close at 17,380 won on Monday.
Industry observers say the South Korean pension scheme is taking a step back from the intra-group deal that finally cleared a regulatory hurdle, giving foreign and minority shareholders casting votes.
The NPS holds a 6.85% stake in Enerbility. Doosan Corp. and its stakeholders own 30.67% of the company. Including that of the NPS, foreign and minority shareholders make up 64.56% of Enerbility’s outstanding shares.
ROBOTICS’ BUYBACK PRICE
At Robotics’ shareholder meeting also set for Jan. 12, the NPS will also vote for its takeover of Bobcat only when Robotics’ base share price for the merger as of Jan. 10 is higher than its buyback price of 80,472 won.
Its shares advanced 6.21% to end at 57,400 won on Monday. But it sees little difficulty to win support from shareholders. Doosan Corp., the group’s holding company, owns 68.2% of Robotics.
DIVERGENT ADVISORS
Proxy advisor International Shareholder Services (ISS) said on Monday that Robotics’ merger with Bobcat constitutes a conflict of interest and benefit only controlling shareholders.
Align Partners Capital Management Inc., a South Korean activist investor, joined ISS in advising shareholders to veto the merger. It added major global pension funds, including CalPERS., CPPIB, BCI and City of New York Group Trust., voiced their opposition to the deal.
In contrast, another proxy advisor Glass Lewis and a slew of Korean advisory groups advocated the Doosan Group deal.
To go ahead with it, at least one-third of Enerbility shareholders must attend the shareholder meeting next month and two-thirds of them need to approve it.
One Robotics share will be swapped into 0.043 of a Bobcat share, up from the previously proposed ratio of 1:0.031.
By Byung-Hwa Ryu
hwahwa@hankyung.com
Yeonhee Kim edited this article.
